(Bloomberg) — At Berkshire Hathaway Inc.’s annual meeting in Omaha on Saturday, Warren Buffett praised Apple Inc. — after revealing he had reduced his stake in the company.
Most read on Bloomberg
Berkshire reported a $135.4 billion stake in the iPhone maker at the end of the first quarter, up from $174.3 billion at the end of the year. The move quickly became one of the most important topics as the meeting progressed, even though Berkshire had sold some Apple stock during the previous quarter.
Despite the sale, Apple is “even better” than American Express and Coca-Cola, which are “wonderful” companies that Berkshire also owns, Buffett told thousands of people in Omaha. Unless something drastically changes, Apple will remain his biggest investment, he said, hinting that tax implications motivated the sale. The iPhone may be one of the best products of all time, Buffett added.
Apple has faced numerous headwinds: a $2 billion antitrust fine, falling sales in China and the abandonment of a decade-old auto project. The company’s shares have fallen about 5% this year.
The sale boosted Berkshire’s liquidity, which reached a record $189 billion at the end of March. Given current market conditions – where rate cuts are uncertain, inflation remains high and geopolitical risks are plentiful – Buffett said he doesn’t mind amassing cash and said cash could reach $200 billion by the end of the quarter.
Cash also benefited from higher interest rates, generating $1.9 billion in interest income, compared to $1.1 billion in the same quarter a year ago.
Berkshire’s cash flow has grown despite a dearth of large deals. Buffett said Saturday that he hasn’t been able to find any recent acquisitions that would “move the needle” for the company. Investors also took this as a sign of his opinion on the stock market.
“Buffett is hoarding cash and therefore is bearish on the stock market,” said Bill Smead, chief investment officer at Smead Capital Management. “He is unlikely to use these funds unless he has the opportunity to purchase an entire company or there is a significant market sell-off of 30% or more.”
Here are some other key takeaways from Berkshire’s annual meeting and results:
Income gain
In a sign that the U.S. economy remained robust at the start of the year, the conglomerate’s combined businesses – which include manufacturers, homebuilders, insurance companies and retailers – generated $11.2 billion dollars in operating profit, a jump of 39% from the previous year.
Improving results from its insurance business contributed to the increase, earning $2.6 billion compared to $911 million in the same period last year. At its auto insurer Geico, pretax profits more than doubled to $1.93 billion, reflecting higher average premiums and lower claims, Berkshire said in its earnings release. The company returned to profitability last year after several consecutive quarters of losses.
“There is still work to be done, but in the meantime, we…
